Shower Power, Inc., a firm in monopolistic competition, produces shower radios. The company's economists know that...

Shower Power, Inc., a firm in monopolistic competition, produces shower radios. The company's economists know that it can sell no radios at $80, and for each $10 cut in price, the quantity of radios it can sell increases by 50 a day. This relationship continues to hold until the price falls to $20. The firm's total fixed cost is $3,000 a day. Its marginal cost is constant at $20 per radio.

a)Draw the demand curve faced by the firm and its marginal revenue curve. Also, draw ShowerPower's marginal cost and average total cost curves.

Please explain

Expert Solution

Rahul Sunny answered 2 years ago

Shower Power, Inc., a firm in monopolistic competition, produces shower radios.

Shower Power, Inc., a firm in monopolistic competition, produces shower radios. The company's economists know that it can sell no radios at $80, and for each $10 cut in price, the quantity of radios it can sell increases by 50 a day. This relationship continues to hold until the price falls to $20. The firm's total fixed cost is $3,000 a day. Its marginal cost is constant at $20 per radio.a)Draw the demand curve faced by the firm and indicate...

You have been called in as a consultant for Palo, Inc a manufacturer of shower radios....

You have been called in as a consultant for Palo, Inc a manufacturer of shower radios. Although Palo's management is very happy they reported $2,478 more in net operating income for the month than expected, they want to know why net operating income is higher especially since demand for the radios dropped. Information regarding the most recent month follows: budget actual Units 11000 10500 Sales $ 440000 $ 430500 Variable expenses Variable cost of goods sold $ 352000 339297 Variable...

Is it true in the long-run, a firm under monopolistic competition has market power but earns...

Is it true in the long-run, a firm under monopolistic competition has market power but earns no profit? Explain.

In monopolistic competition A. each firm has limited power to influence the price of its product....

In monopolistic competition A. each firm has limited power to influence the price of its product. B. each firm has a large market share. C. a single firm can dictate market conditions. D. collusion is possible.

Economists develop and apply models of market competition (pure competition, pure monopoly, monopolistic competition, oligopoly) to...

Economists develop and apply models of market competition (pure competition, pure monopoly, monopolistic competition, oligopoly) to describe the conditions that impact price and output decisions made by managers of organizations. Real world markets can be described as existing along a continuum and exhibiting elements of competition and monopoly. Explain what is meant by that statement. In your response, identify some measures and characteristics that economists use to describe different market structures (i.e. how do economists distinguish between market structures?).

25. The "monopolistic" element of monopolistic competition is due to the fact that A) the firm...

25. The "monopolistic" element of monopolistic competition is due to the fact that A) the firm has no rivals that produce close substitutes. B) the firm is large relative to the market. C) the firm produces on the inelastic portion of its demand curve. D) the firm, facing a downward sloping demand curve, has some control over price. 26. In the long run, an industry under monopolistic competition is characterized by excess capacity because A) each firm tries to...

Understand the market behaviour of any selected firm in monopolistic competition. Recognize where the monopolistic competition...

Understand the market behaviour of any selected firm in monopolistic competition. Recognize where the monopolistic competition model is appropriate to us.

What happens in the long run for the monopolistic competition firm and for the oligopoly firm?...

What happens in the long run for the monopolistic competition firm and for the oligopoly firm? Which of the two are better for the consumer and why?

All of the following industry types have market power except A) monopolistic competition. B) perfect competition....

All of the following industry types have market power except A) monopolistic competition. B) perfect competition. C) monopoly. D) oligopoly. CCC Computer Company has a monopoly on the sale of a specialized color printer. If it sells two of these printers its total revenue is $1,000, and if it sells three color printers its total revenue is $1,200. The marginal revenue of the third color printer sold is A) equal to the price B) $400 C) less than its price...

What type of industry produces a homogenous or standardized product? a. perfect competition b. monopolistic competition...

What type of industry produces a homogenous or standardized product? a. perfect competition b. monopolistic competition c. oligopoly d. monopoly What type of industry has NO control over the price it can charge for its product? a. perfect competition b. monopolistic competition c. oligopoly d. monopoly Which of the following is at the opposite end of the spectrum from perfect competition? a. imperfect competition b. monopolistic competition c. oligopoly d. monopoly Which of the four market structures includes the pop...

Question